After announcing at the end of the second quarter plans to sell its casino properties to focus on its racing-related properties, Churchill Downs Inc. reports progress in those efforts.
As outlined by CDI CEO Bill Carstanjen during an Oct. 29 conference call with analysts and shareholders, those racing-related properties that will become the core include Churchill Downs racetrack, specifically Kentucky Derby Week; historical horse racing, which offers pari-mutuel gaming in a slot machine-like package; and the TwinSpires advance-deposit wagering platform.
As the company carries out its plan to focus on those properties, Carstanjen expressed confidence CDI would be able to sell its nine casino properties in the fourth quarter. He noted significant interest in the properties.
"The process is going very well. We expect to announce executed transactions for the properties by year's end," Carstanjen said. "Our regional gaming assets have attractive characteristics that distinguish them. They are generally newer and better-maintained than comparable properties, and generate strong cash flow with high free cash flow conversion.
"We intend to use the sales proceeds to significantly reduce leverage, to repurchase shares, and to selectively invest in Churchill Downs Racetrack and other high-return growth opportunities."
On Oct. 28 CDI announced that its board had approved a $750 million share repurchase program as it sharpens its focus on racing-related properties. Carstanjen said that plan reflects the confidence the company has in selling the casino properties.
"As we look ahead, our company's strategy is focused on our three highly valuable platforms: Churchill Downs racetrack and the Kentucky Derby, our HRM (HHR) businesses, and our TwinSpires business," Carstanjen said. "Each combines strong cash generation, durable competitive advantages, and attractive opportunities for profitable growth.
"These three cornerstones form the foundation of a more focused portfolio designed to compound shareholder value over the long term. Churchill Downs racetrack and the Kentucky Derby, increasingly all of Derby Week, is the crown jewel of our portfolio; it is a unique global sporting and entertainment event combining tradition, community, competition, and celebration in a way few events can replicate," Carstanjen added. "Our opportunity is to expand the relevance, reach, and earnings power of Derby Week while preserving the traditions that make it so special. We plan to accomplish this by making smart capital investments, continuing to enhance the guest experience, elevating the quality of racing, introducing innovative wagering opportunities, expanding social media and television viewership, and growing our sponsorship platform. Derby Week is positioned to be a meaningful driver of adjusted EBITDA growth in the near term and for years to come."
On Wednesday, CDI and the New York Racing Association announced that the Thoroughbred Championship Series will be expanded to include four races for 3-year-old fillies. Earlier this year, CDI and NYRA announced a six-race series for 3-year-old colts that would include the Kentucky Derby, Belmont Stakes (G1), and a new championship.
READ: Oaks Division Added to Thoroughbred Championship Series
"Today, horse racing captures significant attention around individual marquee events, particularly the Kentucky Derby. The TCS is designed to connect these moments into a continuous story that unfolds throughout a season," Carstanjen said. "Sports fans naturally follow championships, rivalries, leaderboards, and athletes over time. We believe the TCS format will create that same opportunity for horse racing, giving fans more reasons to stay engaged.
"By encouraging the best horses to compete against each other, we believe both dedicated enthusiasts and casual fans will develop stronger emotional connections with the stars of the sport while increasing visibility and demand for the highest level of Thoroughbred racing."
